💧 Why Air-to-Water Tech is my next investment

AIR —————> WATER

There’s a species of desert beetle that survives by capturing water vapor onto the back of its shell. When enough water has been collected, the beetle vaults into a headstand. The water rolls off the back of its shell and into the beetle’s mouth.

Cody Soodeen, a former architect & engineer, took inspiration from this beetle and set forth to build Kara Water (‘kara’ is a derivation of the beetle’s name).

Put simply, Kara Water is the next evolution of the household well.

Their suite of devices draw water from regular air and turn it into a drinkable source of water – needing nothing but electricity.

During my research, I decided that this is either the next big thing – or cleverly disguised snake oil. Here’s what I found:

• 🌬️ Rebranding the Dehumidifier: Air-to-Water technology, can it be used for drinking?

• 👴 Unlikely Customers + Growth: Why Baby Boomers love Kara Water + Kara Water’s next act

• 💧 Water you Doing?? Will I be investing in Kara Water?

REBRANDING THE DEHUMIDIFIER

Air in, Water out…

Kara Pure – their flagship product – retails for $4,899. A steep price, but can you really put a price tag on unlimited water?

The machine works by sucking air into the device and extracting H20 molecules through desiccant technology. The water is then filtered and ready to dispense with the touch of a button. 

Surprisingly, this process can produce up to 11 liters of clean water per day – enough to fill 22 regular size water bottles. 

The underlying technology for Kara Water has existed for decades – so why is now the right time to convince consumers that they can drink from a souped-up dehumidifier?

There’s a few trends working in Kara Water’s favor:

• People are growing wary of plastic containers, especially after a bombshell study reported that the number of microplastics in plastic water bottles is 100x higher than previously thought

• Consumers have higher expectations for water purity. There are dozens of water brands each conveying a special angle of purity – (Voss, Essentia, Icelandic, Fiji, Smartwater, etc)

• A new study reveals nearly half of US tap water is contaminated with PFAS, chemicals considered to be dangerous to our health

• The sustainability movement has brought attention to single-use plastics. Consumers are opting for more sustainable options to limit pollution

• The U.S. is rapidly growing its elderly population (this will make more sense in the next section)

Kara Water is tapping into these trends and making incremental tech advancements to bring a superior product to market. Kara Water is also more than just a concept, which gives me a huge boost of confidence. The company has delivered hundreds of its flagship device, mainly to its early Indiegogo backers.

UNLIKELY CUSTOMERS + GROWTH

Early Adopters are OLD…

Upon first glance, I imagined that Kara Water would be embraced mainly by young, wealthy, pollution-conscious adults. 

However, an unlikely group of consumers have emerged as a major customer base for Kara: baby boomers. 

Many aging baby boomers no longer want to lug packs of water into their home. Kara Pure eliminates the need to drag a 24-pack of water inside – the self-refilling device requires nothing but a glass to drink out of.  

And Baby Boomers are getting old, fast. 

Every day, 10,000 people in the US turn 65. 

This is a huge audience and a major tailwind for Kara Water. I think their flagship product can benefit greatly from this generation’s changing behavior and increasing water-quality standards. 

Baby Boomers alone can make Kara Water a multi-million dollar business. But to hit a home-run, Kara unveiled an entirely new product line at CES just a few weeks ago. 

The Kara Pod takes the underlying technology of Kara Pure, but couples it with a Keurig-like coffee machine. 

It’s a countertop device that retails for $299 – a much more affordable option than the $5k Kara Pure. 

The Kara Pod continuously replenishes water, negating the need for a hydro-hookup or regular refills. The device can bring in up to 3.2 liters a day, enough to fill 18 cups of coffee. And it provides Kara a continuous revenue source through the sale of coffee pods. 

While I think the standalone Kara has big-market potential, it’s difficult to understate the size of the coffee market. Roughly 68% of all Americans make coffee at home – over 225M people. 

The current king of at home coffee – Keurig - was last valued at $1.25B (2014), and that figure has surely grown since then. 

The Kara Pod is a more convenient version of Keurig – and one that leans into the consumption trends of today’s consumer. I think they’re going to need to work out kinks of the first model and slim down the size – but if they can do that, the Kara Pod could really catch fire with coffee drinkers.  

The $299 price point also indicates that Kara is capable of bringing a mass-market air-to-water device to market, which could enable future product derivations.

WATER YOU DOING??

Is the glass half full or half empty…

There are a few critics of Kara Water’s feasibility, most notably the YouTuber EEVblog. His takedown video of Kara Water is worth watching, as it’s important to inform your investment decisions with both sides of the picture. 

His video claims that this ‘scam’ of a company is just a dehumidifier with a filter. His take misses the mark, even if Kara Water is just a dehumidifier with a filter.

Kara Water is reimagining existing tech and repurposing it for clean drinking water. Just because it was used differently in the past, doesn’t mean that it can’t be rebranded and configured to meet the needs of today’s consumers. 

EEVblog did lobby one strong point that I greatly considered – Kara Pure uses an abnormally high amount of electricity. So much so that the cost of producing water far exceeds the cost of bringing in water through the tap. 

This may be true, but I think that people dropping $5k on a Kara Pure probably aren’t as price sensitive as the normal consumer. Additionally, the Kara Pod is designed to draw far less energy. Soodeen claims the device will operate on 280-320 watts per hour (a little more than a TV).

Excessive energy consumption is a risk for Kara Water, but not one that will prevent me from investing. 

I’m going to place a bet on the continued desire for reliable, clean drinking water. I’ll be investing $1,000 into Kara Water here.

While Air-to-Water technology barely receives a whisper in today’s tech talks, I think this will be a much bigger deal in 10 years. It was difficult to even find ‘Air-to-Water’ market projections, that’s how much the space is being ignored right now. 

But times are changing, and I think Kara Water brings the right combination of marketing, product design, and business savviness to see it through. 

Also, I wouldn’t DARE mess with these guys…